Alleviation of Poverty As a Priority for Socio-Economic Development in Russia
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Chapter 1 Alleviation of poverty as a priority for socio-economic development in Russia 1.1. POVERTY IN THE PERSPEC- onitoring, which aims to measure preva- TIVE OF THE MILLENNIUM Mlence of poverty, traditionally seeks DEVELOPMENT GOALS answers to two questions: how many people or households are below the poverty line (the eduction of extreme poverty is defined as share of the poor) and how poor they are (the Rprimary among the development goals resource deficit of the poor, poverty gap). This formulated in the Millennium Declaration. is also the basis for targets to be addressed by states implementing the Millennium t is clear from consideration of the problem in Declaration and for indicators measuring Ian international context that poverty is, by its progress in attainment of MDG Goal 1. very nature, relative. In countries with a lower level of economic development poverty is arget 1. To halve the number of people mainly manifested in such phenomena as Tliving in extreme poverty by 2015. The hunger, lack of potable water, illiteracy, high following indicators are suggested for mortality from elementary diseases (e.g. diar- appraising efforts to achieve that goal: rhea). In developed countries lack of means to – the share of people with current con- sumption resources below one dollar 1% of the Russian population was in (USD 1) a day1; extreme poverty by the Millennium – poverty gap dynamics based on a poverty Declaration definition (poverty line of line of USD 1 a day; USD 1 per day) in 2003, and 5% were in – the share of consumption by the poorest extreme poverty by the World Bank defi- 20% of people in overall consumption. nition (USD 2.15). arget 2. To halve by 2015 the number of buy a car or secure a mortgage loan may be Tpeople suffering hunger. Achievements defined as poverty, and most emerging markets in meeting this target will be measured by: include a wide range of durable goods in the – prevalence of weight deficiency among minimum consumer basket for poor families. children under 5 years of age; – the share of people with calorie consump- ut, despite significant differences in what tion levels below the minimum. Bis classed as low material welfare stan- dards in countries with different levels of eco- he share of the Russian population in nomic development, final analysis of the notion Textreme poverty is much less than 20%, so of poverty leads to a single set of goods, serv- Target 1 can be viewed as largely achieved. ices and satisfied needs, lack of which is con- Monitoring and indicators relating to the share sidered inadmissible in any country today. of people with income below USD 1 a day (and 30 Human Development Report for the Russian Federation 2005 to the respective poverty gap) concern allevition Russia experienced a major redistribu- of extreme poverty. There are no relevant offi- tion of resources in favor of the medium- cial data for Russia, since the Federal State and high-income strata of society as it Statistics Service measures poverty on the basis entered the phase of economic crisis and of the official subsistence minimum, which is market transformation in the early 1990s. much higher than one dollar. The World Bank uses a poverty line equal to USD 2.15 daily of both poverty and inequality: the lower the income to define extremely low living standards resources of the poorest 20%, the higher both in the region which includes Russia, since cold poverty and inequality. Data presented in climates require additional essential spending Figure 1.1 show that Russia experienced a on heating, winter clothing and foodstuffs2. major redistribution of resources in favor of the medium- and high-income strata of socie- he World Bank calculates that 6.1% of the ty as it entered the phase of economic crisis TRussian population were in extreme pov- and market transformation in the early 1990s. erty in 2000, based on a poverty line of USD The indicator varied in a range of 5.8–6.1% 2.15 per day. Data for 2003 available from the from the mid 1990s until 2000, which we take National Survey of Welfare and Participation of as the start point for Russian economic the Population in Social Programs (NOBUS)3 growth, when it settled at a level of 5.6%. That allow us to give more up to date expert esti- shows that the poor have not received priori- mates of extreme poverty in Russia. The results ty access to the fruits of economic growth, suggest that 1% of the Russian population was and suggests potential for poverty reduction. in extreme poverty by the Millennium Declaration definition (poverty line of USD 1 per he criteria of calorific value of food and day) in 2003, and 5% were in extreme poverty Tweight deficiency among infants serve to by the World Bank definition (USD 2.15). identify undernourishment and hunger. Calorie consumption data, unlike data on or countries with a low level of economic daily incomes below USD 1 or USD 2.15, are Fdevelopment the share of the poorest regularly published in Russian official statis- 20% of the population in total consumption is tics. These statistics can be compared with a measure of extreme poverty. But in Russian calorific norms of the official Russian mini- conditions this share approximates to official poverty levels with an overlap to families, Figure 1.1. Share of the poorest 20% of who are not officially classified as poor: in the Russian population in total income, 2004 the Russian official definition of the 1970–2003, % poverty line classified 17.8% of the popula- tion as poor. We should note that the official 10.1 10 Russian subsistence minimum (poverty line) 9.5 9.8 is 5–6 times higher in price terms than the 7.8 extreme poverty line of USD 1. In what fol- 6.1 6.1 66 lows we will use the World Bank poverty line 5.8 5.8 5.6 5.6 5.6 of USD 2.15 a day to define extreme poverty (Box 1.1). t is important to emphasize that resources Iof the poorest 20% of society are a measure 1970 1975 1980 1985 1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 31 Chapter 1 mum consumer basket to estimate what pro- insufficient height). Incidence of undernour- portion of the population is undernourished. ishment among Russian children differs little By this standard, nearly 40% of the Russian from its incidence in developed countries, population is undernourished in calorie and the indicator is much better than in devel- terms and 60% of Russians do not eat oping countries7, but the very existence of enough protein. However, the average such an extreme form of poverty is sufficient Russian daily consumption level of 2684 calo- grounds for monitoring it and designing ries means that Russia does not qualify as measures to overcome it. malnourished by international standards4. n conclusion, an overview of official statis- fficial data on calorie consumption do not Itics, results of alternative research, and our Otake account of eating away from home, own calculations indicate that: which adds about 20% to consumption levels. 1. Incidence of extreme poverty in Russia, After this adjustment the percentage of measured by criteria defined in the Millen- Russians, who are undernourished by stan- nium Development Goals, is in a range of 1- dards of the minimum consumer basket, 5% of the population. However, an account of declines to 10-15%. In any case, the calorie con- the marginalized groups would increase the sumption standard implied by Russia’s official overall incidence of extreme poverty. minimum consumer basket is well above the 2. Malnutrition is a relevant aspect of poverty in modern Russia. The current Russian social security system 3. Standards, which are used to measure includes targeted assistance to vulnerable poverty in Russia, do not allow monitoring in groups, but does not treat the poor as a full compliance with the indicators set out in priority group for social programs. the Millennium Development Goals. 4. Tracking of poverty dynamics in compli- required daily calorie intake for normal meta- ance with the Millennium Development bolic functioning (1500 calories)5, which serves Goals would require modernization of the as a calorie criterion for malnutrition. The data entire system of indicators used by Russian available to us suggest that 1-3% of the Russian poverty monitoring. population are affected by this form of extreme 5. The current Russian social security sys- poverty, but we should stress again that official tem includes targeted assistance to vulner- statistics do not keep track of it. able groups, but does not treat the poor as a priority group for social programs. ncidence of weight deficiency among chil- Idren under 5 in Russia is measured by anthropometric research on nutrition. The 1.2. SPECIFIC ASPECTS OF only source of information is research organ- POVERTY IN RUSSIA AND MEA- ized by the Institute of Nutrition6, which has SURES FOR ITS ALLEVIATION found that cases of acute and chronic under- nourishment do exist in Russia and are con- overty is a distinctive feature of Russia centrated among families with lowest Ptoday, and has inevitably attracted the incomes. Abnormally low height and weight attention of executive and legislative branch- suggesting chronic nutrition deficiencies are es of power, and of society as a whole. most common among infants (usually low Halving the incidence of poverty is a declared weight) and in the 7-10 age group (usually priority goal of the Medium term Program for 32 Human Development Report for the Russian Federation 2005 Socio-Economic Development of the Russian Figure 1.2.